By Kevin Hand, Star-Bulletin

While many people would have sold out, Loo - who was starting his career as a stockbroker - held out for the long-term.

The stock was Longs Drug Stores Inc. and over the years, the company's share price has appreciated so much that he was able to finance his children's education.

"It went up so much that I sent my (two) kids to Punahou School with that one investment," said Loo, now Dean Witter Reynolds Inc.'s senior vice president for the Pacific region.

Loo shares that story with many first-time investors to illustrate the power of long-term investing in blue-chip stocks, which he believes is one of the most important keys to wealth building.

If you purchased 100 shares of McDonald's Corp. at $2,252 in 1965, those shares, allowing for splits and stock appreciation, would have grown into 37,180 shares today, or about $1.6 million, Loo said. An investor who bought 100 shares of Wal-Mart Stores Inc. in 1965, would have seen their holdings in the company grow into 102,400 shares, or more than $2.3 million.

"If you're in the market a long time it really pays off," said Ted Jung, senior vice president and Honolulu branch manager at Smith Barney Inc.

Taking the long-term view is just one of a handful of investing principles that advisers, financial planners and stock brokers try to instill in their first-time investors.

These principles are fairly simple but they require a lot of discipline. They also can be a very powerful tool for wealth building - not only for the beginner but even for the most

sophisticated trader.

Here are just some of the guidelines that first-time investors should follow:

The younger couple probably can afford a little more risk in their investments whereas the older couple is probably more interested in preserving capital.

Knowing your goals should be the first step in building a portfolio. How much risk you can carry or how conservative you invest should be a function of your investment goals. Other questions to worry about: What is your exposure and how quickly do you need your investments to pay off?

"People have to know their own circumstance and be realistic about what they're trying to achieve," said David Fry, president of Fry & Co., a local stock brokerage firm. "They have to know what they can sleep with, investment-wise."

Again individual situations vary, so the exact mix between particular investments should differ. But some strategists - like Bill Barton, executive vice president at Hawaiian Trust Co. - say that investors need to have anywhere from 10 to 15 individual stocks to achieve adequate protection.

When possible, investors also should diversify into investments other than stocks, such as bonds and money market investments.

Besides diversification, mutual fund investors also receive the benefits of professional money management.

Some should invest in more than one mutual fund since the funds themselves stress different investments as growth stock, bargain investments or foreign issues, Barton said.

One investment that's been catching on recently is the "fund of funds" concept, which attempts to cover a broad range of opportunities by investing in various mutual funds, according to Jung.

"When you're buying a fund, you're buying instant diversification," said Bill McRoberts, financial adviser with McRoberts & Associates in Kailua.

Know your investments

Some investors spend more time buying a kitchen appliance than they do buying a stock or bond. The person who knows little about the intrinsic value of his investment, can be at the mercy of the herd mentality that often drives up a popular stock. If the stock falls out of favor, investors often either sell at a loss or misses out on a buying opportunity.

"The reality is that everybody's situation changes," McRoberts said.